Marine Bank & Trust Co. v. Greenville Savings Bank & Trust Co.

• Decision Date: 01 October 1923
• Docket Number: 23427
• Citation: 133 Miss. 91,97 So. 526
• Parties: MARINE BANK & TRUST CO. v. GREENVILLE SAVINGS BANK & TRUST CO
• Court: Mississippi Supreme Court

97 So. 526

133 Miss. 91

MARINE BANK & TRUST CO. v. GREENVILLE SAVINGS BANK & TRUST CO

No. 23427

Supreme Court of Mississippi

October 1, 1923

Division B

(Division B.) January 1, 1920

CHATTEL MORTGAGES. Statute making record of mortgage on cotton crop notice of contents held not superseded by Uniform Warehouse Receipts Act.

Section 2787, Code of 1906 (section 2291, Hemingway's Code) under which the recording of a mortgage or deed of trust on a crop of cotton operates as notice of the contents thereof, is not superseded or repealed by Uniform Warehouse Receipts Act (Acts 1920, p. 315) section 41, providing that a person to whom a negotiable receipt has been duly negotiated acquires (a) such title as the person negotiating had for had ability to convey to a purchaser in good faith for value, and such title as the depositor or person to whose order the goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith for value; and (b) the direct obligation of the warehouseman to hold possession for him according to the terms of the receipt.

HON. E N. THOMAS, Chancellor.

APPEAL from chancery court of Washington County, HON. E. N. THOMAS Chancellor.

Suit by the Greenville Savings Bank & Trust Company against the Marine Bank & Trust Company. From a decree for complainant, defendant appeals. Affirmed.

Decree affirmed.

Bell & White, for appellants.

The negotiation of the warehouse receipts in this case was valid and binding.

I. A RECORDED MORTGAGE CANNOT DESTROY IN EFFECT THE WAREHOUSE RECEIPTS ACT. it is a presumption in law, not needing the citation of authority, that a legislative act is presumed to be purposeful and valid and that the legislature will not be presumed to have intended to do a vain thing. The object of the Warehouse Receipts Act was to make negotiable these receipts and enable one to sell and transfer the receipts by delivery without further ado. If each possible purchaser must search the records of the county in which the cotton is supposed to be raised, or adjoining county, then there could be no negotiation of the receipts. Cotton could be raised in Washington county, or in any other county where the mortgage would be recorded, and stored in a county other than the one in which it was raised; the receipt would give no clue to where a mortgage might be recorded and any purchaser, under the construction asked by appellees, would proceed at his peril not knowing where to look for a mortgage and having no opportunity to look for it. The consequence would be that the receipt would cease to be negotiable and the object of the act would be destroyed. The framers of the act had in mind the possibility of exactly what has happened here, and provided a punishment for it, under sections 37 and 40.

II. THE GREENVILLE SAVINGS BANK & TRUST COMPANY BY PERMITTING THE HANDLING OF THE COTTON BY THE RAISERS THEREOF AND THE POSSESSION BY THEM OF THE RECEIPTS IS IN A COURT OF EQUITY ESTOPPED AS TO THE APPELLANT WHO WAS THE PURCHASER FOR VALUE WITHOUT NOTICE. Under section 40 we submit that the Greenville Savings Bank & Trust Company, by permitting the retention of these receipts is estopped from complaining. The act specifically states in section 40 that the receipts may be negotiated by any person to whom their possession or custody had been entrusted by the owner, placing this transaction directly within the terms of the act. The Greenville Savings Bank & Trust Company is certainly to blame because it permitted the negotiation of the receipts and cannot ask a purchaser in good faith to lose the money expended. Its remedy is against the raiser of the cotton, against whom it may proceed clearly and against whom it may recover a judgment for any balance due it after an exhaustion of the other securities. There is nothing in the agreement of facts to show that the raisers of the cotton are insolvent, or that a judgment against them would not be good. See Pollard v. Reardon, 76 So. 6.

III. THE GREENVILLE SAVINGS BANK & TRUST COMPANY HAD OTHER SECURITY FOR ITS INDEBTEDNESS THAN THE COTTON WHICH IT PERMITTED TO BE SOLD AND THE MARINE BANK AND TRUST COMPANY HAS NO OTHER SECURITY FOR ITS DEBT.

Boddie & Farish, for appellees.

The appellee had its deed of trust on the cotton recorded as provided by law, and while the appellant had no actual notice, it did have constructive notice, so as to prevent it from being a purchaser in good faith.

There is no element of estoppel involved in this suit. The court will notice from the statement of facts that the appellee often made demands on the grantors in the deed of trust for the delivery of the cotton and the compress receipts, and the fact that the cotton was raised by the grantors in the deed of trust and the grantors hauled same to the compress and took the compress receipts therefor, and failed and refused to deliver same to appellee, certainly could not estop the appellee in a court of equity from claiming the cotton under its deed of trust and could not affect the lien of the deed of trust as to the cotton.

This suit will determine the relative rights of the appellant, the purchaser of negotiable receipts issued in conformity with the Uniform Warehouse Act, and of the mortgagee of the cotton covered by the receipts (appellee). No other question whatever is involved in this appeal. In construing section 41 of the act, the supreme court of Alabama in Brown Mercantile Co. Inc. v. Yielding Bros. Department Store, Inc., 76 So. 4, says: "We think it clear that there is nothing in the language of this section which would justify the construction insisted upon by counsel for appellant. The expression therein, 'or had ability to convey to a purchaser in good faith for value,' clearly means, of course, provided such person was such purchaser in good faith for value. If the purchaser had actual notice, no one, for a moment, would contend that he was a purchaser in good faith. Our registration laws were enacted for the purpose of giving notice, and the mortgage here in question, having been duly recorded, gave the purchaser a constructive notice so as to prevent him from being a purchaser in good faith." We think this the correct construction, and it follows therefore that the appellant was not a purchaser in good faith. We think the Alabama case is decisive. The decree of the chancellor should be affirmed.

OPINION

COOK, J.

The complainant, Greenville Savings Bank...